Harvard the Miser Shorts the City of Boston . . . Again

Although Boston has a much lauded negotiated Payment in Lieu of Taxes (PILOT) agreement with its nonprofits with more than $15 million in tax-exempt property, and the biggest nonprofits participated in developing the formula, 14 of 19 colleges paid less than was requested by the city in the year that ended June 2016, and not one of the eight colleges with the most valuable property holdings paid in full.

Boston, of course, like Washington, DC—which we reported on yesterday—is rife with tax-exempt property, and this can have an effect on the taxes of others. “It’s disappointing,” said Boston City Councilor Josh Zakim. “Obviously, I think these colleges are an asset and a benefit to the city, but they also have an impact on the neighborhoods around them. . . . We need this to operate the city. We’re talking about our schools, affordable housing, police, fire, EMS, city streets, public works.”

Cambridge-based Harvard University, with the largest endowment in the world, kicked in only 56 percent of what was expected for its Boston real estate.

Among the schools paying the full amounts requested were Tufts University; MCPHS University; Showa Boston Institute; New England College of Optometry; and Boston Architectural College.

Medical institutions, on the other hand, mostly provided the requested amounts—10 of 16 paid in full.

The new PILOT agreement is only five years old. Before that, Boston negotiated payments individually with nonprofits. And, as we mentioned, the task force that created its rules included representatives of nonprofits, including leaders of city colleges.

There is a provision that allows schools to take off a portion of what they owe for community benefits provided, but Zakim said that the PILOT calculations “already take into account the many benefits our colleges and universities provide.”

The Boston Globe takes Harvard on in particular:

Harvard, for example, broke a higher education fundraising record this spring when, after only 2 1/2 years, it surpassed its five-year fundraising goal of $6.5 billion, the student newspaper there reported. Its endowment has grown to $37.6 billion as of the end of June 2015.

Harvard paid $3.2 million toward Boston’s PILOT program in fiscal 2016. That was about $1 million more than it did in the previous fiscal year, but still significantly lower than the $5.8 million the city requested.

If Harvard’s property were taxable only in the City of Boston, it would owe $46.96 million, but the city only requested $5.8 million, and it only paid 56% of that. As mentioned in yesterday’s piece, congress will soon be reviewing endowment spending, with an eye toward just these kinds of issues of public citizenship.—Ruth McCambridge

Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.